Italian Political Crisis Pushes Global Shares and Euro Lower

Italy which has been without a government since last March due to an election that led to a hung parliament has affected the economy of the country which has already been weak for quite some time. Italy which is currently the third largest economy in the eurozone has concerned the global markets over the last couple of months.

The country arrived to this situation after President Sergio Mattarella refused the nomination of Paolo Sabona as economy minister from a eurosceptic candidate. President Mattarella then held snap elections and appointed former International Monetary Fund official Carlo Cottarelli as the interim prime minister.

Italy is currently known for being one of the most indebted countries in the world with its unemployment rate hitting around 11% while its economy have slipped way below its level back in 2007. The outlook of the snap votes have affected the financial market on Wednesday’s trading session when the elections may affect the role of the country in the European Union.

Decline of Euro

The euro which was down below $1.16 for the first time since November last year due to the ongoing concerns surrounding the Italian debt market as well as the uncertainty on its economy has recently recovered by around 0.4% against the U.S. dollar to $1.1593.

However, some have forecasted that the Euro may not be able to hold its recent rally most led by the ongoing concerns in Italy in the midst of the tariffs threats from U.S. President Donald Trump worth $50 billion possibly being imposed against China.

Majority of market sentiments are currently seeing a potential downside against the movement of the Euro mostly caused by the crisis in the eurozone and their inability to maintain a steady government.

Asian and European Shares

European shares slipped as the euro edged lower to a ten-month on Wednesday. The Dax in Germany was up by 0.6% while the CAC 40 in France was down by around 0.6%. The pan-European Stoxx Europe 600 index also declined by 0.1% but has edged down by 1.4% during the previous trading session. On the other hand, the FTSE 100 in the United Kingdom was seen trading higher.

Asian shares also declined during the same trading session with shares in Tokyo’s Nikkei 225 stock index losing 1.5%. The Kospi index in South Korea also lost 2% to 4,409.03 while the Hang Seng Index in Hong Kong edged 1.4% to 30,056.79. The Shanghai Composite also dropped 2.5% as well as the S&P ASX 200 index in Australia logging a 0.5% loss.

See also: Asian Shares Close Higher on Xi Jinping Economic Plans

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